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How About Some Intellectual Diversity At The Labor Department?

As the cabinet turns: Hilda Solis announced this week that she will soon be stepping down from her post as secretary of labor. Solis, a former Congresswoman from California who served as Obama’s labor chief since 2009, explained in an email to staffers that her decision was made over the holiday:

I enjoyed my first opportunity in years to reflect on the past and my future, with an open mind and an open heart… After much discussion with family and close friends, I have decided to begin a new future, and return to the people and places I love and that have inspired and shaped my life.

Solis pointed with especial pride to her Labor Department’s efforts on job training during a tough economy. The White House concurred, praising Solis in a statement, “Her efforts have helped train workers for the jobs of the future, protect workers’ health and safety and put millions of Americans back to work.”

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CNN is appealing a recent ruling from the National Labor Relations Board which forces CNN to hire back workers from a temp agency known as Team Video Services (TVS) after the news giant terminated its contract with them 11 years ago.

Some background: On September 29, 2003, CNN publicly announced its termination of TVS’ contract after years of partnership so that it could bring technical services jobs in-house rather than contracting work out to TVS. CNN’s DC Bureau Chief Kathryn Kross insisted that CNN’s decision was a result of developing technology which had created the demand for a new workforce. NYC Bureau Chief Karen Curry said CNN was bringing technical services jobs in-house so that CNN could, “…work much easier with both the crews and the technical people…[a]nd that by getting rid of [TVS], then they can have more control of the technical people.”

But the NLRB ruled on September 17, 2014, that CNN was actually a joint employer of TVS and wrongfully terminated its contract with the temp agency because they did not negotiate with TVS’ unionized technicians before making the decision. It’s worth noting that this case was filed in March 22, 2004 so the reclassification of CNN’s relationship with TVS is coming a full decade later. That fact doesn’t help the already-tarnished image of the NLRB, an ostensibly impartial adjudicator.

The Board claims that CNN terminated the contract out of “antiunion animus,” and that CNN had a hand in determining working conditions for the technicians because they required them, among other things, to work at least 40 hours a week, required the availability of part-time employees on a “24-hour a day, 7 days a week basis, as needed by CNN,” and, “‘informed’ and ‘advised’ TVS on ‘the market rate salaries’ to pay the employees.” That level of involvement, the Board argued, classifies CNN as a joint employer of TVS under the traditional test for that status: hiring, supervision, and direction (three of the “Laerco factors” from the NLRB case, Laerco Transportation, 269 NLRB 324, 325 (1984).

But in the dissent, Judge Philip A. Miscimarra tells us that the contract between the two entities states that TVS employees,

are not employeesof [CNN], and shall not be so treated at any timeby either [TVS or CNN]” (emphasis added). Finally, the Agreement provided that TVS had “sole and absolute discretion and responsibility for hiring, firing, wages,benefits, compensation, direction of the work force andother matters of personnel and labor relations” regarding all technical personnel (emphasis added). The record clearly establishes that TVS—and not CNN—was solely responsible for these traditional indicia of “employer” status.

Miscimarra also tells us that, “TVS acted independently as the ‘employer,’ even though, like countless other businesses, TVS was heavily dependent on its commercial contract with a principal client, CNN.” Miscimarra takes his colleagues to task for relying on highly selective evidence to prove that CNN engaged with TVS in the day-to-day direction associated with an employer because the two examples the majority cited were the most extraordinary news events of the last thirty years: the September 11 terrorist attacks and the explosion of Space Shuttle Columbia.

Miscimarra concludes that, “My colleagues concede that CNN had no direct role in hiring, firing, disciplining, discharging, promoting, or evaluating employees and that CNN did not actively codetermine the TVS technicians’ other terms and conditions of employment.”

It is very understandable that CNN is appealing this decision to the U.S. Court of Appeals in the DC Circuit. The ruling would not only be devastating to CNN’s ability to innovate, but it could set a precedent that would discourage contracting, franchising, and even the use of temp agencies during an already fragile economic recovery. If the Board really is redefining the test for joint employer status to be indirect or potential control of working conditions, contracts across the country could become permanent. User companies would be joint employers of the temp agencies they use, and franchisors would become joint employers of their franchisees.

Any joint employer classification should depend on whether co-determination of working conditions like hiring, firing, and wage decisions come directly from both parties. If this new test is upheld, companies should be wary about determining working conditions for a temp agency’s employees with which they contract lest they be classified as employers of those workers.

It’s unfortunate that the government even has the ability to get involved in CNN’s business with TVS but that’s what happens when we give our government permission to regulate contracts between two private entities. The NLRB is heading down a perilous path that could lead to contracting itself becoming an endangered activity.